6 tips to help new parents put their money in order before bringing a child home

6 tips to help new parents put their money in order before bringing a child home

By Andrew Housser

When the U.S. government
reached an impasse on the federal budget and essentially shut down on Oct. 1,
more than 800,000 nonessential federal employees found themselves out of work
and, therefore, out of pay. Even the 1.3 million workers deemed essential
(those in charge of national security, public safety and programs such as
Social Security) can have their paychecks withheld while they are still working.
The good news is that Congress may vote to retroactively pay furloughed
employees once the government resumes operations. Still, many of those who have
suddenly find themselves without incomes are facing tough times. These steps
can help see you through this lean time.

Scrutinize your budget. Take a critical look at what you have coming in and
going out. Think about all sources of income including anything from a spouse's
income to rental properties, for example. Include mortgage, rent, car payments,
insurance payments, utilities, groceries, gas and any credit card payments in
your expense tally. Then look to see where you might be able to cut back. Can
you reduce the data plan for your smartphone for a few months? Make do without
cable TV? Put your gym membership on hold?

Call creditors. Notifycredit card companies
and utility providers about your financial situation and
inquire about their hardship policies. Ask about making smaller payments until
you return to work or see if other options are available. Your primary focus
should be on making on-time payments on secured debt (a loan secured by a
tangible asset, such as your home or car). Missing these payments could lead to
repossession of your property. If possible, continue to make the minimum payment
– on time – on all bills to avoid late charges, penalties and fees. Turn off
automatic payment options for now so that you have complete control over your
funds.

Check into unemployment benefits. You are eligible for unemployment benefits because your
job loss (although temporary) was caused through no fault of your own. Be aware
that you could be required to repay your state for unemployment compensation if
you later receive retroactive pay for the furlough period. To receive benefits,
you must file a claim in the area where you work -- not where you live. It can
take several weeks for claims to be processed and checks to arrive. Find
information about your state's unemployment programs via the U.S.
Department of Labor.

Tap into emergency funds. Experts recommend setting aside at least six months'
of living expenses for just this type of crisis. Do resist using retirement
funds, even if you do not have an emergency fund or your savings are not very
robust. Taking money out of a retirement fund prematurely will lead to a hefty
tax and penalty fee. Plus, few people replace what they take out. For this
(hopefully short) period of time, you may be better off using a credit card
(one with a low interest rate) for purchases that you simply cannot put off and
for which you have no other funds.

Buy with cash.
Studies show that people who do not use debit or credit cards are less likely
to make impulsive purchases. In fact, those who stick to cash spend about 20
percent less than shoppers wielding plastic. Do not close your credit card
accounts, which can negatively affect your credit score. Simply leave the cards
at home so you are not tempted to rack up charges that you are unable to pay
off.

Search for other sources of income. The shutdown falls at a time when retailers are
looking to hire part-time, temporary work for the holidays. Of course, there
are other ways to bring in money. Now that you have more free time, you can
spend some of it organizing your home. Sell unneeded items on eBay or
Craigslist, or hold a yard sale. Or moonlight in your neighborhood or
community, earning spending money for work you do (for instance, handyman
tasks, computer help, crafts or child care).

Unfortunately, government
shutdowns are not new. This year's standoff marks the 18th time that
the United States has ceased operations since 1976. Most of these situations
end relatively quickly. But a government shutdown in 1996 lasted 21 days. It is
impossible to say when officials will resolve the current crisis. Having a
financial strategy in place can help you get through this challenging time.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.

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